Budget 2026: Centre allocates ₹1.4 trillion to states, keeps 41% share

The Centre has allocated Rs 1.4 trillions for states for the Financial Year 2026-27 as Finance Commission grants, Union Finance Minister Nirmala Sitharaman said on Sunday.

Presenting the Union Budget 2026-27, FM Sitharaman said the Centre has accepted the 16th Finance Commission's recommendation to retain the vertical share of devolution at 41 per cent.

She said, "The Government has accepted the 16th Finance Commission recommendations to retain the vertical share of devolution at 41 per cent. I have allocated Rs 1.4 trillions for states for FY 2026-27 as Finance Commission grants. These include rural and urban local body and disaster management grants."

The 15th Finance Commission recommended a share of states in the central taxes to be 41 per cent, and the 16th Finance Commission has retained the vertical share of devolution.

In December 2025, for grants to rural bodies, the Centre released more than Rs 723 crores to Rajasthan and Jharkhand. This funding was allocated under the 15th Finance Commission to strengthen village-level institutions, according to a Ministry of Panchayati Raj press release.

The government allocated these funds to support local groups in carrying out important work in the areas. In Rajasthan, a total of Rs 303.0419 crores was released as the first part of the money for the financial year 2025-26. This specific amount was meant for 24 district panchayats, 339 block panchayats, and 3,857 gram panchayats.

Nirmala Sitharaman also proposed a Coconut Promotion Scheme aimed at increasing production and improving productivity to boost India's competitiveness in coconut cultivation.

She said the scheme will focus on major coconut-growing states and include measures such as replacing non-productive trees with new, high-yielding saplings.

"To further enhance competitiveness in coconut production, I propose a coconut promotion scheme to increase production and enhance productivity through various interventions, including replacing non-productive trees with new saplings or plants of varieties in major coconut-growing states," Sitharaman said.

FM Sitharaman presented the Union Budget for record ninth time.